If a government imposes a tax, but then pays a taxpayer’s bill, did it ever impose a tax in the first place? Just about every member of the European-dominated United Nations Statistical Commission says it did not. The Commission has recommended members exclude from their taxation statistics the value of carbon emission permits handed out free to large polluters.

Australia will strike out on its own, valuing at market rates emissions permits handed out free and ensuring they are added to the official tax take.

“Our senior management have agonised over this,” ABS director of macroeconomic research Derick Cullen told The Age. “We took exception to what the Commission was doing.”

The dispute came to a head at an international meeting in February in which Australia put its case for the market valuation of emissions permits and lost. The Commission recommended instead that member nations value permits at their “historic cost”, which in the case of free permits is zero...
The ABS considers the approach “will misrepresent the costs to emitters, the debt of government and the taxes received by government,” the Bureau said in an unusually impassioned account of the disagreement published yesterday.

It will enable the mostly European nations with carbon trading schemes to report a lower tax takes and lower government debt than if they had adopted the Australian approach.

Inflation has slipped to its lowest point this century, giving the Reserve Bank ample room to further cut interest rates and calling into question claims that Australians are pressured by the cost of living.

The new annual inflation rate of 1.2 per cent reflects dramatic slides in the prices of fruit and vegetables and also in the prices of staples such as bread which is now 3 per cent cheaper than when opposition leader Tony Abbott identified it as problem during the 2010 election.

The Bureau of Statistics says the price of cheese has slipped 1.9 per cent in the past year, the price of meat and seafood 2.1 per cent, the price of children’s clothes 1.8 per cent, the price of cars 1.6 per cent and the price of household appliances 2.7 per cent.

Increasing sharply at the same time are large regular expenses such as rent (up 4.4 per cent), electricity (10.7 per cent), gas (8 per cent) and water and sewage (9.3 per cent). The price of child care has climbed 9.8 per cent in the past year, education an average of 6.1 per cent, insurance 7 per cent and petrol 2.5 per cent.

The clear pattern is that the prices of goods that can be imported have been sliding, down 2 per cent over the year, while the prices of goods and services produced at home have been climbing, gaining 3.3 per cent over the year... But the figures the prices of imported goods may be stabilising. In the past three months they climbed back 0.7 per cent rather than continuing to fall.

Treasurer Wayne Swan called on “doomsayers and rentseekers” to acknowledge that when averaged by the amounts Australians actually spent, prices climbed just 1.2 per cent, less than at any time since the late 1990s.

Shadow treasurer Joe Hockey said the prices that were rising the fastest were those Australians were least able to avoid paying.

He reached back five years to claim that since Labor had been in office electricity charges had climbed 64 per cent, water rates 59 per cent, insurance premiums 35 per cent and education fees 31 per cent.

“This is before the carbon tax,” he said. “Now is not the time to drive up the price of everything.”

Mr Swan said the low inflation rate completed a set of figures far better than at any point during the previous Coalition government’s term in office.

“It is rare in our economic history to have low unemployment, a huge investment pipeline, healthy consumption and contained inflation at the same time. It’s the best possible combination. But because it is good news it doesn’t tend to get treated like the hand-wringing, the alarmist predictions from people who want to peddle gloom and doom in our economy.”

Asked who he was referring to Mr Swan refused to be drawn, identifying: “anyone out there who is pushing their own barrow”.

On Monday private sector forecaster Delloite Access Economics said the budget surplus had evaporated and the mining investment boom has only two years to run.

Financial markets were unimpressed with the inflation result, pushing the share market slightly lower on fears Spain may be headed for a financial bailout.

“Inflation is low which leaves the door open for the Reserve Bank to cut rates further if it deems it necessary,” said HSBC chief economist Paul Bloxham. “But it has already cut rates 0.75 points in the past three months. On local conditions alone it is unlikely to go further. But the risks to the global economy are skewed to the downside. There is little standing in the way of the Bank responding to those risks.”

The average of the so-called underlying rates watched by the Reserve Bank is 1.95 per cent, slightly below its target band of 2 to 3 per cent.

Tuesday, July 24, 2012

Deloitte Access has been taking some flack, as have the media for headlining its forecasts, which like officialforecasts of the resources boom, have often missed the mark.

Micahel Pascoe has some tongue-in-cheek tips for avoiding forecasting embarrassment:

1. Never put a time limit on a forecast as eventually just about everything happens, you just have to stay alive long enough. The RBA likes to leave the timing of its big picture stuff wisely vague. Doomsday forecaster Steve Keen has been running away from the timing of his housing crash prediction ever since he lost his bet with Rory Robertson.

2. One step further from there - or perhaps really just a subset of the above - is making forecasts a long way in the future on the basis that you and everyone else will have moved on by the due date a couple of decades hence.

3. Make lots and lots of forecasts about everything and then only claim and boast about the ones that came off, relying on eforecasting has always been a mug's game. Something as complex as the nation's economy has all manner of variables at play, let alone when the vagaries of the world wide also are at work on it.

4. The Nostradamus special - make your forecasts as obscure and vague as possible so that you can subsequently interpret your Delphic ravings as meaning what you want them to mean with all the benefit of hindsight.

The other side of Australia’s mining investment boom won’t look so bad according to new long-term forecasts released today by BIS Shrapnel.

The research firm says dwelling investment is about to take off in most of the country and investment in the two thirds of the economy not exposed to international trade is not too far behind.

“Mining investment will soon stop growing,” says senior economist Tim Hampton. “It should remain high but it will stop growing.”

“In its place we see an upswing in residential property investment from later this year.”

“The carbon tax has come and gone and households have realised it isn’t the end of the world; in fact they’ve more money in their pockets than they had.”

Mr Hampton says the return to housing investment will be driven by chronically short supply in NSW, Queensland and Western Australia.

“Particularly in NSW we’ve gone for so long without building houses that the vacancy rates are so low the rents are starting to move aggressively. Victoria is an exception... It has had better policies in place, meaning it doesn’t have the pent-up demand.”

“When dwelling investment picks up it’ll also mean more demand for accountants and lawyers, and NSW simply hasn’t been building the commercial property. We haven’t had enough non-mining business investment to underwrite even moderate levels of demand, so as demand recovers we’ll see big capacity constraints.”

BIS Shrapnel is forecasting economic growth of 2.9 per cent per year for the next five years climbing to Australia’s long-run average of 3.2 per cent after 2017.

It says the biggest risk to its forecast is a collapse in energy prices toward the end of the decade, big enough to bring on a recession.

“We are not so much worried about a slowdown in Chinese demand. We can handle that because it will bounce back up. What would be worrying would be an unexpected jump in supply, particularly of liquefied natural gas. That would permanently depress prices and stall investment. It’s not our central forecast, but it’s a risk,” Mr Hampton says.

Separate Bureau of Statistics figures released ahead of Wednesday’s inflation result show producer prices contained. The index for the final stage of production rose 0.5 per cent in the June quarter, producing an annual increase of just 1.1 per cent, the lowest for two years.

Respected forecaster Deloitte Access believes Australia’s budget surplus has evaporated and its mining investment boom has only two years to run.

The new forecast marks a watershed in assessments of Australia’s prospects, implying in the words of this morning’s Access publication “that the strong bit of Australia’s two speed economy won’t stay strong for more than another two years or so”.

Deloitte Access is Australia’s leading private sector budget forecaster, set up by former Treasury economists in 1988 in order to provide services to both sides of politics.

Its report says Australia’s mining investment boom will slow more sharply than had been expected. “Mining companies are making it clear the current spike in investment is due to decisions taken a while back, whereas we are getting few new mining mega-projects across the line,” it says.

Access stresses its forecast does not present an immediate threat to Australia’s economic outlook but it comes after Labor’s narrow weekend byelection win in Melbourne in a state poll the Coalition did not contest, further complicating the task next year’s preelection budget.

“That’s when the official budget update is due. If it shows this year’s forecast $1.5 billion budget surplus is no longer there he will have to decide whether to cut again in order to continue to forecast a surplus. The risk is the cuts will hurt.”

“The window dressing in the May budget was designed not to hurt. One of the tricks was to bring spending forward from 2012-13 to 2011-12. It was a popular sleight of hand, but it can’t be done again... This time he would have consider delaying payments, and that would be unpopular.”

Mr Richardson said had no problems with the government’s budget forecasts at the time they were presented. But since then coal and iron ore prices have turned down, and the sharemarket has dived.

“The budget is more exposed to commodity prices than it used to be. They drive profits which drives company tax but they now also drive takings from the minerals resource rent tax.”

“The budget forecast nominal GDP growth of 5.5 per cent in 2011-12 and 5.0 per cent in 2012-13. Our forecasts have it more like 4.7 per cent and 4.2 per cent. Unless there’s a fresh turnaround its forecasts won’t be met.”

Mr Richardson was unable to say by how much he thought the budget would undershoot the government’s May forecast, saying it was still a “moving target”.

But he was prepared to say the carbon tax would have little economic impact. “If is a far bigger issue politically than economically,” he told the Herald.

Treasurer Wayne Swan hailed the Access report as an endorsement of Australia’s economic strength saying it helped show the carbon tax scare campaign “was nothing more than a fraud”.

He took to twitter using the hashtag #EcoFact to claim that Australia had just passed 21 consecutive years of economic growth. Previously used to denote discussion of ecological matters the hashtag was taken over by critics who said the economy was in good shape “despite Labor’s efforts” and that he had broken a promise over the defence budget.

Shadow Treasurer Joe Hockey said the budget surplus was under threat “because it was never real in the first place”.

“Labor only forecast a surplus through a cook-the-books Budget that was noted more for money shuffles than fiscal responsibility,” he said.

Mr Richardson said one upside of an early end to the mining investment boom would be lower interest rates.

“The Reserve Bank has had to create room for for the investment boom. Without the boom it will be able to do more to help families. The rebalancing will not be a complete negative, but it will mean economic growth will not be as strong as it was,” he told the Herald.

Monday, July 09, 2012

“The Greens will never embrace Labor’s delight at sharing the values of everyday Australians, in our cities, suburbs, towns and bush, who day after day do the right thing, leading purposeful and dignified lives, driven by love of family and nation.”

Never has it been more important to understand the Greens. Never has a prime minister had less of a clue.

From July the Greens will decide which bills become law and which don’t. The prime minister says they "will never embrace Labor’s delight at sharing the values of every day Australians, in our cities, suburbs, towns and bush, who day after day do the right thing, leading purposeful and dignified lives, driven by love of family and nation”. Maybe, but that’s not what they will be called on to do.

They will be asked to vote on tax bills, on corporate regulation and on all manner of measures relating to economic management.

There are clues as to how they will vote, and if we are to believe her, the prime minister has missed every one.

Gillard thinks the Greens don’t get economics. They “wrongly reject the moral imperative to a strong economy,” she told the Whitlam Institute.

Her sidekick Anthony Albanese says they “tend to be a grab-bag of issues, tend not to have a coherent policy that adds up”.

Her resources minister Martin Ferguson says they want to “sit under the tree and weave baskets with no jobs”.

It's a forgivable impression until you examine what their supporters actually think...

...Asked to rate issues in order of importance in an Essential Media poll in January more Greens rated economic management number one than rated protecting the environment number one.The gap was closer amongst Greens voters than other voters, but the point is there was a difference - Greens put the economy number one.

Polled in November about a specific issue - regulation of the banks, Greens voters were on every measure more closer to economic orthodoxy than Labor voters.

Asked if banks should be restricted to lifting rates only in line with Reserve Bank, 87 per cent of Labor voters said yes. Even amongst Coalition voters 82 per cent said yes. But amongst Greens voters the result was 73 per cent, suggesting they are more likely to have studied economics.

Asked if bank fees should be kept to the cost of providing the service, 93 per cent of Labor and also 93 per cent of Coalition voters agreed. Only 90 per cent of Greens voters thought so.

Asked about a cap on bank salaries 88 per cent of Labor voters were for it. Coalition voters were far less keen at 83 per cent. In the middle, less in favour of hobbling the market than Labor voters although more so than Coalition voters, were the Greens at 86 per cent.

The views of Greens supporters are not outside the mainstream, except that they are likely to be more in touch with orthodox economics than the mainstream.

Greens voters are far more likely than either Labor or the Coalition to support higher taxes on mining profits, a view in line with the International Monetary Fund, the Henry Review and the Australian Treasury.

They are less likely than the majors to be fussed about a return to a budget surplus by exactly 2012-13 (as are orthodox economists although interestingly slightly keener than labor voters on spending cuts in the budget to come.

They are more likely than Labor voters to act against self interest. Only 17 per cent of Labor voters would accept a tax on products purchased online form overseas. A higher 19 per cent of Greens voters would.

And they know more.

An astonishing 10 per cent of Labor voters and 12 per cent of Coalition votes are deluded enough to think half our migration intake is boat people. Only 6 per cent of Greens voters think so.

They are accepting of the mainstream scientific position on climate change - that it is happening and caused by human activity; far more accepting than supporters of either Labor or the Coalition.

And they believe market mechanisms rather than regulations are the best way to get emissions down.

Their tax policies echo those of the Henry Tax Review. Tax breaks for high income earners would go, fringe benefits tax concessions that encourage the needless driving of cars would be scrapped and capital gains would no longer be tax-preferred over other returns from saving.

All income received in whatever form would be taxed at the standard rate and the scales would be rejigged to remove the high effective rates faced by Australians trying to get off welfare.

Henry would do this by flattening the scales and making the first $25,000 earned tax-free.

The Greens aren’t so sure about that, but neither are Labor of the Coalition. The point is that on nearly every area where the Greens diverge from Henry, the Coalition and Labor do too.

On most of the areas where then Coalition and Labor are reluctant to embrace Henry the Greens are keen to.

The big parties won’t touch the Private Health Insurance Rebate. The Greens would kill it, as would Henry.

The big parties aren’t attracted to a death duty. The Henry Review is, and the Greens would bring it in with a threshold of $5 million and an exemption for the family home, farm and small business.

The big parties are grudging about making the mammoth superannuation tax concessions more progressive. Henry isn’t, and the Greens would do it, after a “full review”.

This isn’t an argument in favour of the Greens policies, although as it happens I find them attractive. It is an argument that they fit within the economic mainstream. They are coherent, readily available on the web, and far more than a grab-bag from a “party of protest” that sits “under the tree and weave baskets with no jobs”.

If the Greens have got it wrong on economics, then so too have the economics text books they seem to have read and so too has Ken Henry.

Their real position is important because it is their real position that will determine what gets passed into law in the two to three years ahead, not the misleading dumbed-down characterisations of a prime minister and ministers who should know better.

UPDATE: The latest Essential Report does indeed show Greens supporters out of touch with mainstream Australia on something - asylum seekers. But even here Greens supporters are not as much out of touch as might be imagined. 35 per cent believe the Labor has been too tough on asylum seekers, a surprising 30 per cent believe Labor has not been tough enough.

Sunday, July 08, 2012

Australia is set to do it again. BusinessDay's half-yearly economic survey has found our private sector economists believe the country will grind its way through the 2012-13 financial year to record solid growth, despite risks of Europe's problems deadening the world economy.

Our economists see Australia broadly continuing along its present path, dodging any significant fallout from the eurozone crisis, but divided into two economies travelling at very different speeds. Unemployment will grow.

The panel is hopeful, though far from certain, that the biggest threat to global growth the potential breakup of the eurozone will be averted, or failing that, managed in a way that avoids sparking what Monash University's Jakob Madsen terms "irrational investor behaviour".

Whether Greece remains in the euro or not, most of the panel expects Australia to be largely unaffected by Europe's crisis. Any impact will be swamped by the strength of the mining construction boom, and continued demand for minerals from China and India.

On average, our 22 forecasters predict Australia's gross domestic product will grow by 2.9 per cent in the coming 12 months, within the 2.5 to 3.5 per cent range forecast by the Reserve Bank, although slightly less than the budget forecast of 3.25 per cent as the year average.

They expect global output in 2012 will expand by 3.2 per cent, a bit less than the 3.5 per cent forecast in April by the International Monetary Fund. But many in the panel see global confidence returning in 2013, lifting prices for Australia's mining exports, and reversing the slide in the terms of trade.

Most disregard the forecasts of a further fall in commodity prices, and signals by BHP and Rio that mining projects could be put on hold. They say mining construction work for the next year or two is now locked in, and while prices may have peaked, the peak in mining investment is several years away...

Thursday, July 05, 2012

Low interest rates and $1 billion of lump sum carbon tax compensation payments propelled consumer spending toward a record high at the end of the financial year making June the biggest month for motor vehicle sales in Australian history.

The Federal Chamber of Automotive Industries says an extraordinary 112,722 new vehicles were sold in June, a jump of 17 per cent on the previous June. Although partly driven driven by end of financial year considerations, the surge wasn’t driven by a desire to beat an impending tax change. In fact the change that took place on July 1 will make buying vehicles even more attractive for small businesses, allowing them to claim up to $5000 as an immediate tax deduction.

Sales of sport utility vehicles surged an astounding 46 per cent between the two Junes, climbing from 20,793 to 30,326 meaning one in every four vehicles sold in June was an SUV.

TD Securities economist Alvin Pontoh said the strong first quarter consumption growth recorded in the national accounts appeared to have continued into the second quarter.

“The Reserve Bank’s rate cuts are gaining some traction. The risk that the Bank will ‘wait and see’ before doing more has increased,” he said.

Carbon tax compensation payments totalling $325 million flowed into the bank accounts of families receiving TAx Benefit A and B in March. A further $700 million in payments to pensioners appeared in bank accounts in June.

Bureau of Statistics retail figures released yesterday show a surge of 0.5 per cent in May after increases of 0.9 and 0.1 per cent in March and April. Retail spending is climbing at a trend rate of 0.4 per cent per month, equating to healthy trend growth of 4.3 per cent per year.

Annual spending growth is exceptionally lopsided. Spending grew 10 per cent in Western Australia, 4.3 per cent in Queensland and just 2.2 per cent in the rest of Australia combined. The 2.2 per cent growth rate is below the rate of inflation implying no real growth in the quantity of goods and services sold out outside of the the two large mining states...
Treasurer Wayne Swan said despite the good national result “parts of our retail sector remain under pressure from changing consumer preferences and more cautious consumer behaviour”.

At one end of the spectrum trend spending on household goods is slipping a that rate of 0.1 per cent per month, despite encouraging signs in May. At the other end of the spectrum spending at cafes and restaurants and on takeaway food is exploding at the trend rate of 1 per cent per month.

Spending in Victoria is scarcely growing, inching ahead at the trend rate of 0.1 per cent per month. NSW spending is climbing at a trend rate of 0.5 per cent per month.

Board members attending yesterday's meeting concluded inflation was about where it should be, although there was some concern about the risk of high inflation down the track now that the Australian dollar was no longer climbing. They saw economic growth as close to average and unemployment close to its long-term low, notwithstanding some high profile job losses.

Members took the view that after after eight months of rate cuts totalling 1.25 percentage points board it was time to take stock and wait until there was a clear reason to move rates in either direction.

The Reserve Bank’s measure of discounted home loan rates has fallen from 7.05 per cent to 6.15 per cent. The monthly cost of serving a $300,000 loan has slipped from $2130 to $1960.

Australia’s next cut in interest rates is more likely to be triggered by international than domestic developments... The Bank remains concerned about the strength of the Chinese economy despite better news in the past month. It believes conditions are worsening in both Europe and the United States.

Treasurer Wayne Swan welcomed the decision to keep rates on hold noting that at 3.50 per cent the Bank’s official cash rate remained lower than at any time under the previous Liberal government.

“While some of our sectors face challenging conditions, today’s decision reflects the fundamental strength of the Australian economy amidst international turbulence,” he said. “Of course, we understand there are many Australian families facing financial pressure who feel like it’s someone else’s boom. That’s why at the centre of this year’s budget was a spreading the benefits of the boom package to give every Australian a stake in the mining boom.”

Former Reserve Bank economist Paul Bloxham said the Bank had made it plain it was in no hurry to cut rates again.

“Unless events change, they won’t be rushing to alter monetary policy in the short term at least,’’ he said.‘‘They’d want to see the effect of all the easing that’s happened.’’

Figures on building approvals for private houses released yesterday showed an improvement after the May rate cut, climbing 9 per cent after falling 11 per cent in April. The Bureau of Statistics smoothed measure of continued to slide, slipping a further 1.3 per cent.

Tuesday, July 03, 2012

The Bureau of Statistics has got the official employment figures wrong, and although happy to acknowledge the errors, it won’t correct them in the official record because it would cost too much money.

Officially, employment grew not at all in 2011 after surging 363,500 in 2010. Yesterday in an invitation-only seminar attended by The Age assistant statistician Paul Mahoney said employment probably climbed 30,000 to 35,000 more than officially acknowledged in the first nine months of 2011 and climbed 60,000 to 70,000 less than acknowledged in 2010.

This means official figures overstated the weakness in the labour market that led the Reserve Bank to cut rates at the end of 2011 and overstated the strength that led it to push up rates at the end of 2010.

“We acknowledge we have problems with the way we are benchmarking the labour force at the moment,” Mr Mahoney said. “We are not hiding behind this, we are being very open about it. This is a public seminar, this is going to be repeated a few times.”

The problem arises because in order to convert the results of its door to door employment survey into figures for whole nation the ABS has to estimate the size of the Australian population. Usually it gets the estimate right. But at times when the rate of population growth is changing rapidly it can get it wrong. Instead of revising the official employment figures when more correct population information comes to hand it instead revises its estimate of future population growth. This means incorrect employment figures remain on the public record and future employment growth figures are adjusted in the opposite direction to compensate.

The ABS will attempt to save money by moving its monthly employment survey on line, posting passwords and login codes to the 29,000 households that take part rather than visiting them and following up with phone calls. It will also abolish or make less frequent a number of less-important labour force surveys.

The unemployment rate - presently 5.1 per cent - is unaffected by the Bureau’s problems with its measure of employment.

"When a discrepancy between the official population
estimate and the labour force survey population benchmark
arises, the normal approach for constructing the
population benchmarks removes the difference over
time by forcing the projected population benchmark
to gradually converge toward the expected
official estimate of the population.

[Our] adjusted estimate suggests that employment
growth was around ½ percentage point lower
in 2010 than the published estimate and around
½ percentage point higher over the past year. By
coincidence, this bias has exaggerated the recent
cycle in employment growth."

The Reserve Bank board is considered certain to sit on its hands for the first time in three months today amid signs its previous rate cuts are stabilising property prices.

The RP Data Rismark survey finds Sydney and Melbourne prices bounced back 1 per cent in June after slipping in May 1.2 and 2.7 per cent.

Daily data shows the turnaround began after the Bank’s May 0.50 point rate cut and gathered pace after its June 0.25 point cut.

“Things are improving, but we would need further gains to be assured of a stabilisation in house prices let alone a recovery,” said Westpac economist Matthew Hassan.

The Sydney median price is $541,000, down 2 per cent over the past year. The Melbourne median price is $480,000 - down 6.6 per cent.

Separate figures from mortgage broker AFG show a surge in refinancing to take advantage of the Reserve Bank rate cuts totalling 1.25 percentage points since November...
Two in every five of the new mortgages sold in June were for borrowers wanting to refinance rather than buy. In a sign that borrowers expect further rate cuts this year the popularity of fixed rate loans slumped to its lowest point since September. One in every six home loans were at fixed rates, down from one in every four in March.

Every one of the 23 market economists surveyed by Bloomberg expects the Reserve Bank to stay its hand today - an unusual consensus. Pricing in the futures market which is notorious for overestimating the likelihood of rate cuts puts the probability of a cut today at just just 16 per cent.

AMP chief economist Shane Oliver said a spate of strong employment news since the June board meeting will leave the board feeling it can wait before cutting again.

‘‘I tend to think because they cut at two meetings in a row, and because the growth and employment figures surprised on the upside, they would probably be inclined to sit back and wait and see,’’ he said.

Deutsche Bank economist Adam Boyton said he thought the Bank would cut again later this year.

‘‘Consumer confidence is lower now than when the Bank started to move at the end of last year. In an environment where the terms of trade are declining, even economic growth of the sort we have had isn’t going to be enough to stop unemployment from drifting up.’’

Swamped in the talk about the carbon tax are a raft of other changes beginning this week overwhelmingly positive for middle to low earners.

From today low paid workers will get an extra $17.10 per week as a result of the national wage decision. Around 1.4 million workers get the extra 2.9% which is likely to flow on to others through enterprise bargaining.

The tax-free threshold will jump from $6000 to $18,200 meaning Australians returning to work part-time and starting part-time work will pay no tax.

New tax scales will give every worker earning up to $80,000 a tax cut - typically worth $300 per year. No-one will face an income tax increase.

Other carbon tax compensation measures will permanently boost pensions and family tax benefits 1.7 per cent. Worth up to $338 per year for single pensioners and up to $110 per child for families that receives Family Tax Benefit A some of the increases have been paid up front. The rest will paid fortnightly on an ongoing basis from March 2013. Families receiving Tax Benefit A will also get an extra $300 per child per year as part of the Spreading the Benefits of the Boom mining tax package...
In NSW the first home buyers grant will be doubled to $15,000 but for the first time restricted to buyers of new homes. Anyone who buys a new home worth up to $650,000 will get a grant of at least $5000. Stamp duty will be cut for first home buyers spending up to $650,000.

Dealing with banks will also become easier. They will prevented from sending out unsolicited offers of higher credit card limits and required to use credit card payments to clear the highest interest rate debt first. Switching banks will be a matter of signing one form once, easier than it has ever been before.

High income earners will find the changes more costly. Taxpayers earning more than $97,000 who choose not to take out private health insurance will be hit with a Medicare levy surcharge of 1.25 to 1.5 per cent instead of the present 1 per cent. Those earning up to $83,000 will get a smaller Private Health Insurance Rebate. Those earning more than $129,000 will lose the Private Health Insurance Rebate.